Estimating market power in a two-sided market: The case of newspapers

Elena Argentesi () and Lapo Filistrucchi
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Lapo Filistrucchi: Department of Economics, CenTER & TILEC, Tilburg University, Tilburg, The Netherlands; Dipartimento di Economia Politica, University of Siena, Siena, Italy, Postal: Department of Economics, CenTER & TILEC, Tilburg University, Tilburg, The Netherlands; Dipartimento di Economia Politica, University of Siena, Siena, Italy

Journal of Applied Econometrics, 2007, vol. 22, issue 7, pages 1247-1266

Abstract: The newspaper industry is a two-sided market: the readers market and the advertising market are closely linked by inter-market network externalities. We estimate market power in the Italian newspaper industry by building a structural model which encompasses a demand estimation for differentiated products on both sides of the market and where profit maximization by the publishing firms takes into account the interaction between them. The question that we address is whether the observed price pattern is consistent with profit-maximizing behaviour by competing firms or is instead driven by some form of (tacit or explicit) coordinated practice. Copyright © 2007 John Wiley & Sons, Ltd.

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Related works:
Working Paper: Estimating market power in a two-sided market: the case of newspapers (2005)
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